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One of the big OPEC producers, Kuwait, expects the oil market to rebalance toward the end of this year on the back of declining inventories and healthy oil demand, Kuwait’s Oil Minister Khaled al-Fadhel told Reuters on Monday.
OPEC is on the right track on its mission to draw down swelled inventories, but the work is not yet done, said the oil minister of Kuwait, which currently pumps around 2.7 million bpd and is the cartel’s fourth-largest producer behind Saudi Arabia, Iraq, and the United Arab Emirates (UAE).
“But we still have some more work to do. I believe the market is expected to be balanced during the 2nd half of 2019, more towards the end of the year,” al-Fadhel told Reuters in written replies to questions.
However, it’s too early to say if OPEC and its allies will decide to extend next month their production cut agreement through the whole of 2019 because there are many uncertainties both on the demand and supply side, the minister said.
The demand-side uncertainties include the U.S.-China trade dispute and its impact on the global economy and oil demand growth. On the supply side, U.S. production continues to increase, but fears of more supply outages from Iran and Venezuela, along with the instability in Libya, clouds the outlook for the oil market balance in the near term, al-Fadhel told Reuters.
“All options are on the table,” the minister said in response to a question if OPEC and its allies could decide at the meeting next month to increase production in the second half of 2019.
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Reports have it that OPEC and its partners may decide to keep the production cuts until the end of the year as the cartel fears a steep price drop if cuts were to be reversed within the next couple of months, according to delegates at a panel meeting of the extended producers’ club who spoke to The Wall Street Journal.
Saudi Arabia’s Energy Minister Khalid al-Falih told Reuters last week that he doesn’t see an oil supply shortage on the market currently. OPEC will be responsive to the market needs, al-Falih said, but reiterated that data still suggests that inventories are rising, especially in the United States.
The EIA’s latest inventory report showed last week a crude oil inventory build of 4.7 million barrels in the week to May 17, sending oil prices lower.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.